Zheng Cotton Challenge 15000 Yuan / Ton Support Position Domestic Cotton Price Can Also Carry On How Long?

In March 28th, Zheng cotton main contract CF1905 once again broke down 15200 yuan / ton interval low point, challenged 15000 yuan / ton supporting position, the industry wait-and-see atmosphere warming again.

It is understood that in the past three months, Zheng cotton has maintained a narrow concussion, plus this is the "golden three" traditional textile peak season. Although this fall is unexpected, it is also reasonable.

Before and after the Spring Festival, the replenishment at the downstream stage is expected to add more confidence to the industry. At the same time, the inventory of state-owned cotton stores is low.

As time goes on, the warehousing cost and interest cost of bank loans of cotton production enterprises are increasing.

Therefore, the spot market has shown strong resilience over this period.

Does that mean that the cost of cotton prices will fall less and less?

Since this year's lint came into the market, Xinjiang's machine picked cotton can be shipped through futures hedging at low cost, reducing sales pressure.

For Xinjiang hand picked cotton, with the exception of a few high quality cotton registered warehouse receipts, the futures price is in short supply for a longer period of time, and manufacturers basically have no chance to carry out hedging.

According to the feedback from some manufacturers who have already made the lint out, most of their goods flow to traders.

A person in charge of a professional repository in Xinjiang has responded, but now there is a lot of pfer of cotton right of goods, but actually it is not out of stock.

According to the investigation and understanding of Xinjiang's warehouses, it also confirms this point. Now Xinjiang's cotton warehouse is still "full of trouble".

Secondly, the stock of some textile enterprises in Shandong, Henan and Jiangsu has picked up slightly recently. In the short term, the strategy of cotton picking along with picking cotton has not changed, and the terminal consumer market has not improved significantly, which makes it difficult for cotton supply pressure to release as soon as possible.

Since the launch of the new cotton market in 2018/2019, affected by the Sino US trade war and the weakening of the macro-economy, the cotton textile industry has been cautious in the upstream and downstream, resulting in the slow digestion of lint and the continuous increase in social inventories to historical highs. The oversupply of the market is difficult to change in the short term.

At the same time, the national cotton rotation policy and increasing import quotas are uncertain, and the mindset of cotton merchants remains cautious.

Therefore, at present, Zheng cotton uplink still has strong support, and it is hard to produce stronger booster effect only on the expectation of individual favorable factors.